The U.S. Treasury chastised some of the nation's banks while admitting a program to help borrowers stay in their homes is progressing at a snail's pace.
The program in which the government will back lenders efforts to renegotiate mortgages has so far helped 270,000 homeowners, far short of the 4 million the program was designed to help, the Treasury said in a letter sent to banks this week.
The two-page letter signed by Treasury Secretary Timothy Geithner and Department of Housing and Urban Development Secretary Shaun Donovan urged banks to hire more loan counselors and open new call centers. Some large banks, in turn, pointed out they have put a good-faith effort into the program.
JP Morgan Chase said it had hired 950 counselors, opened 27 lending centers to help troubled homeowners and modified 87,000 loans. Bank of America said it had "worked diligently" on helping homeowners. Wells Fargo & Co. also released a statement defending its efforts, The Washington Post reported Friday.
It is an issue that has long been rife with finger-pointing. Banks have been reluctant to shave profits from viable loans in a market already spoiled by rising foreclosures. Frustrated homeowners point to banks as confusing the issue by selling their mortgages to firms far removed from the corner bank. Some homeowners just point to the economy that cost them their jobs and, contrary to bureaucratic reasoning, some have been begging banks to foreclose on their properties to stop them from sinking deeper in debt.
The Treasury, meanwhile, took months to carefully craft a program that helped only homeowners who were in serious trouble. Turns out, some of those were in trouble so deep they preferred walking away from their loan obligations, anyway.
With job losses mounting, foreclosures are sure to continue, but the Treasury vowed to press on.
The letter said it would release monthly reports that include details on the banks' efforts. Borrowers who were denied a chance to modify loans would be given a "second look," through a program run by the Federal Loan Mortgage Corp., the letter said.
On Wall Street, the start of the corporate reporting season opened with tentative gains provided by news Dow component Alcoa lost only $454 million in the second quarter. In the same 24-hour period, the Labor Department said first time jobless claims declined sharply, by 52,000, in the holiday-shortened week ending July 4. The International Monetary Fund, meanwhile, projected an economic downturn of 1.4 percent this year, followed by a gain of 2.5 percent in 2010.
Markets were flat in Asia Friday. The Nikkei 225 index fell 0.04 percent, while the Hang Seng index in Hong Kong fell 0.46 percent. The Singapore Straits Times index rose 0.02 percent, while the S&P/ASX in Australia rose 0.82 percent.
In midday trading in Europe, the FTSE 100 index in London fell 0.72 percent, while the DAX 30 in Frankfurt dropped 0.65 percent. The CAC 40 in Paris slid 0.71 percent. The broader DJStoxx 600 dropped 0.75 percent.
